OneWallet posts massive loss as EcoCash thrives

GOVERNMENT-OWNED mobile phone operator NetOne generated a paltry US$1 194 in revenue from its mobile money transfer platform OneWallet for the year-ending December 31 2012 after investing close to a quarter of a million dollars in the product.

This translates to a mere 0,005% return on investment for the country’s oldest mobile operator, according to an audit report on state enterprises and parastatals prepared by Auditor and Comptroller-General Mildred Chiri.

“Revenue of US$1 194 was earned from the One Wallet product for the year ended 2012. The cost of implementing this product was US$225 867 and the return on investment thereof was 0,005% in 2012.

“An analysis of the product performance revealed that the One Wallet product did not have the facility to transfer funds across other networks and customers had to swap their old sim cards with new ones in order to access the new product,” Chiri wrote in the report.

She recommended that the mobile operator increases the “catchment of the One Wallet product to other dealers and enable the transferability of funds across other networks”, warning that failure to do so would lead to the complete loss of funds initially invested in the product.

NetOne’s competitor Econet Wireless (Econet) has managed to generate millions from its mobile money transfer platform, EcoCash.
As of June this year, Ecocash had handled over US$4,5 billion worth of transactions translating into millions in commission and charges, with over 170 million transactions processed since its launch in 2011.

Over a million accounts have been opened since EcoCash was launched with over 10 000 agents countrywide as of June 2014.

In addition, NetOne was found to have debts amounting to US$43 947 589 for the same period with Chiri expressing concern that the company is “financing its operations using borrowings”.

The value of mobile and internet based transactions rose by 44,6% in June from the previous month as the wave of electronic payments continued gathering momentum, according to the Reserve Bank’s monthly July review.

Mobile and internet transactions rose to US$388,46 million last month from US$268,62 million in May.

The growing use of mobile devices in the country has opened the door for advanced financial products with consumers now able to access financial services at any time even in the previously unbanked remote areas.

Econet Wireless said its mobile money transfer platform Ecocash now boasts 3,5 million subscribers. Telecel Zimbabwe subscribers on its similar platform has reached 600 000 since its launch in January. It is targeting 1,2 million subscribers by year end.

The value of transactions processed through RTGS system in June increased by 9% to US$3,7 billion from US$3,4 billion in May, while the volume of transactions registered a decline of 3% from 200 146 to 193 582 in the same period.

The total value of card based transactions increased by 21,04% to US$361,25 million in June, from US$298,46 million in May and the value of cheque transactions increased to US$13,65 million in June from US$12,42 million the month before.

Total mobile subscribers increased from 13,6 million to reach 13,9 million subscribers at the end of June, raising the mobile penetration rate to 106,4%, according to Finance Minister Patrick Chinamasa’s mid-term fiscal policy review statement.

The OneWallet failure is yet another clear demonstration of how government enterprises and institutions have suffered as a result of bad investment decisions and poor corporate governance.
This was also pointed out by Chiri who found that Net One had operated without a substantive board in violation of sound corporate governance practices that require companies with public interest to have a board of directors that meets at least once quarterly.

Chiri said her enquiries had led her to the conclusion that there was an interim board which had met only twice the whole year, and failed to set up committees to deliberate and implement decisions.

The mobile operator’s management responded to Chiri’s findings by saying it could only recommend to government the need for a substantive board as it has “no power or influence in the appointment of the board of directors. It is a matter entirely within the jurisdiction of the shareholder”.

Although it is the country’s oldest mobile operator launched with 500 lines during the World Solar Summit in September 1996 in Harare, Postal and Telecommunications Regulatory Authority of Zimbabwe figures issued in July show that NetOne subscribers, which has about 2,33 million subscribers) has fallen behind rivals Econet (9 million) and Telecel (2,5 million) subscribers.